Ruling Clarifies "Good Faith" in Whistleblower Act

The Minnesota Supreme Court last week made a ruling that impacts employers under the Minnesota's Whistleblower Act. In the case of Friedlander v. Edwards Lifesciences, the Court determined that its prior interpretation of "good faith" has been replaced by the legislature's definition of "good faith."

Now, as of the Aug. 9 ruling, when terminating an employee that "blows the whistle," an employer needs to evaluate its exposure based only on whether it believes that the report made by the employee was "knowingly false or made in reckless disregard of the truth of the matter asserted in the report."

Employers should no longer disregard a potential whistleblower claim because the alleged illegal activity was already known to the employer or because the employee bringing it to the employer's attention was simply doing his or her job in bringing it up.

Before 2013, the Whistleblower Act did not define the phrase "good faith." In Obst v. Microtron, Inc., the Court interpreted "good faith" to mean that the alleged whistleblower must act with "the purpose of blowing the whistle, i.e., to expose an illegality."

Then in 2013, the Minnesota Legislature amended the Act to define "good faith" to mean "conduct that does not violate section 181.932, subdivision 3." This means the report at issue must not be knowingly false or made in reckless disregard of the truth.

In this recent case, the Court determined whether the previous ruling was eliminated by the 2013 amendment.

James Friedlander sued his former employer, Edwards Lifesciences, claiming he was terminated for expressing his concerns that his superiors were breaching contracts and fiduciary duties, and competing in violation of Unfair Competition law. Both Mr. Friedlander and Edwards Lifesciences agreed that they already knew about the conduct in question before Mr. Friedlander reported it.

Basing its argument on the Obst definition of good faith, Edward Lifesciences argued that Mr. Friedlander made his report only to people who already knew about the alleged unlawful conduct. Mr. Friedlander, on the other hand, argued that the 2013 amendment abrogated the Court's prior interpretation of "good faith."

The Court held that its interpretation in Obst only filled a gap in the statute. Because the legislature provided a definition of "good faith" in 2013 that does not require a whistleblower to act with the purpose of exposing an illegality, Edwards Lifesciences' defense that Mr. Friedlander did not intend to expose illegal conduct through his complaints to management was not enough to defeat his claim.

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